Keys Printing Plans to Issue a $1,000 Par Value,20-Year Noncallable

Multiple Choice

Keys Printing plans to issue a $1,000 par value,20-year noncallable bond with a 7.00% annual coupon,paid semiannually.The company's marginal tax rate is 40.00%,but Congress is considering a change in the corporate tax rate to 45.00%.By how much would the component cost of debt used to calculate the WACC change if the new tax rate was adopted? Do not round your intermediate calculations.

A) -0.36%
B) -0.42%
C) -0.44%
D) -0.30%
E) -0.35%